CII outlines measures to encourage repatriation
Stating that the efforts of Indian companies investing overseas by setting up manufacturing and other facilities through JVs and subsidiaries need to be supported by removal of fiscal hurdles, CII has outlined measures that the government can unde...
By TNN |
NEW DELHI: Stating that the efforts of Indian companies investing overseas by setting up manufacturing and other facilities through JVs and subsidiaries need to be supported by removal of fiscal hurdles, CII has outlined measures that the government can undertake in the Budget.
With an increasing outflow of investment from India, CII said repatriation needs to be encouraged. There are no fiscal incentives available currently in relation to the inflow/repatriation of funds into India in convertible foreign exchange as the dividends received by an Indian company from a foreign company ��� either its subsidiary or a joint venture ��� are
fully taxable.
CII has suggested that dividends received from such entities in convertible foreign exchange should be in line with the dividend received from any domestic company.
Section 90 (2) of the Income Tax Act provides that where the Indian government has entered into an agreement with the government of any other country under sub-section (1) for granting tax relief, or as the case may be, avoidance of double taxation, an option is available to the assessee to apply either the provisions of domestic law or of the treaty law, whichever is more beneficial to him.
CII observed that despite this option, the domestic law does not have a provision to grant tax relief against double taxation and the assessees have no option but to apply the provisions of treaty law.
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